BMW is planning to build a new vehicle assembly plant in Brazil, a move that would give the automaker a better grasp of the growing South American luxury car market.
BMW sales in Brazil have grown by an average of 74 percent annually since 2009.
German rival Volkswagen currently operates assembly plants in Brazil, one of which builds the Audi A3. Mercedes-Benz formerly operated a plant in Juiz de Fora, not far from Sao Paulo, but it recently converted the plant to build Daimler trucks. Brazil represents the bulk of the South American luxury car market, although Argentina and Chile are also seeing significant economic progress.
BMW's finance chief Friedrich Eichner confirmed in an email to Reuters that the automaker is submitting an investment plan to the Brazilian government. Separately, the country's trade minister, Fernando Pimental, stated on a radio station in the capital city of Brasilia that the announcement from BMW is forthcoming "within days."
BMW and Brazil have been sparring over the plant since March when the country's government announced hefty import taxes. Even though the BMWs would be built in Brazil, the German automaker sources many of its parts from other countries, which could technically have classified them as imported vehicles.
Presumably, today's news indicates that BMW and the government have reached an agreement.
Just how BMW will launch the plant remains a mystery, however. Automakers often enter new markets by building CKD - or "complete knock down" - vehicles, which are assembled from component groups put together elsewhere as a means of circumventing local taxation regulations. CKDs have been a part of the automotive landscape since the 1920s and they represent a relatively low cost investment for an automaker.